Russia Responds at the EU's Proposal to Lend Frozen Russian Assets to Ukraine

Kyiv remains running out of financial resources to maintain its military and economy afloat, after almost four years of the ongoing invasion by Moscow.

From the EU's perspective, the solution to addressing Kyiv's budget hole of €135.7bn for the next two years rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders seek to give it the green light at their EU leaders' conference next week.

Authorities in Russia warn the EU plan would be an act of theft, and Russia's central bank stated on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Employ Russia's Assets, Say Kyiv and Brussels

Overall, Russia has roughly €210bn of its state reserves frozen in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine argue that money should be used to reconstruct what Russia has destroyed: The European Commission terms it a "loan for reparations" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that money then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "help Ukraine to defend itself successfully against subsequent Russian attacks".

Russia's court action was foreseen in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is worried it will be burdened by an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "destabilise the international financial system".

Euroclear also has an estimated €16-17bn immobilised in Russia.

The leader of Belgium Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "carries significant risks" for his country.

What is the EU's Strategy?

Brussels is under pressure prior to next Thursday's summit to agree on a arrangement that Belgium can accept.

So far the EU has avoided touching the principal funds directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is deemed less risky as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to compensate for the deficit caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU proposals aimed at providing Ukraine with €90bn, to cover a large portion of its financial requirements.

• Option one is to borrow the funds on the markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be challenging when two member states object to funding Ukraine's military.
• That leaves loaning Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now predominantly matured into cash. That funding is Euroclear property held in the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and states it is convinced it has addressed them.

The plan is for Belgium to be shielded with a guarantee encompassing all the €210bn of Russian assets in the EU.

Should Euroclear incur losses of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia took legal action against Belgium itself, any ruling by a Russian court would not be accepted in the EU.

In a key development, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote all together every six months to renew the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic interests of the union" continues.

The Reasons Belgium is Still Not Satisfied

Belgium is insistent it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and is concerned about being left to handle the repercussions if things fail.

A usually fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is about €565bn – think about if it would need to bear a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to secure enough assurances for the loan itself, Belgium worries about an added risk of being vulnerable to extra damages or penalties.

Prof Colaert also believes the stipulation for Euroclear to grant a loan to the EU would contravene EU banking regulations.

"Lenders need to follow stability regulations and shouldn't concentrate risk. Now the EU is asking Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be solvent. And if things turn sour it would fall to Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to get absolute protections for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

Time is of the essence, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the fiscally viable and politically achievable solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

While Russia is unyielding its money should not be touched, there are added concerns among EU officials that the US may want to deploy Russia's frozen billions for another purpose, as part of its own peace plan.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also aware the US has been engaging with Russia about future co-operation.

An initial document of the US peace plan mentioned $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving